Ex parte GST assessment without considering taxpayer's Form reply u/s61(3); order quashed, fresh show-cause proceedings ordered.

The dominant issue was whether an ex parte assessment under the GST enactments was vitiated by failure to consider the taxpayer's reply before initiating proceedings under s.61(3). The HC held that the authority ought to have considered the reply filed in the prescribed form before issuing the show cause notice, and issuance of the notice without such consideration breached the statutory scheme and principles of natural justice; consequently, the impugned assessment order was quashed and the matter remitted to the authority to recommence from the show cause notice stage and pass a fresh order within three months, with the impugned recovery notice kept in abeyance pending such determination.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the ex parte adjudication order confirming tax demand was vitiated for non-consideration of the taxpayer's reply filed to an earlier intimation, and for proceeding on an incorrect assumption that no reply was filed, thereby warranting quashing and remand.

(ii) Whether the consequential recovery notice should be kept in abeyance once the underlying adjudication order is quashed and the matter is remitted for fresh decision.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Validity of ex parte adjudication for non-consideration of reply; scope of remand and pre-deposit

Legal framework: The Court expressly noted that a notice under Section 61(3) of the respective GST enactments could be issued only after considering the taxpayer's reply to the prior intimation.

Interpretation and reasoning: The Court treated it as material that the taxpayer had submitted a reply in the prescribed form on 09.06.2022, but subsequent steps (including issuance of later notices and the eventual adjudication) proceeded on the premise that no reply had been filed, and the reply was not considered. The Court also accepted the submission that the impugned adjudication was ex parte and, applying the consistent approach adopted in similar situations, held that the proper course was to remit the matter for a fresh decision from the stage of the show cause notice after considering the reply already filed (and any further documents to be filed).

Conclusions: The adjudication order dated 27.08.2024 was quashed. The matter was remitted to the adjudicating authority to pass a fresh order from the stage of the show cause notice, after considering the reply dated 09.06.2022. No direction for pre-deposit of disputed tax was imposed. The fresh order was directed to be passed within three months of receipt of the Court's order. The taxpayer was permitted to file a further reply with necessary documents within 30 days, reiterating the earlier stand. If no reply/documents are filed within time, the authority was permitted to proceed to recover tax in accordance with law, as if the writ had been dismissed in limine.

Issue (ii): Effect on recovery proceedings

Interpretation and reasoning: Since the recovery notice sought to recover amounts confirmed by the quashed adjudication order, the Court held that recovery could not continue pending reconsideration on remand.

Conclusions: The recovery notice dated 11.09.2025 was directed to be kept in abeyance pending further orders after remand.

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